How the Federal Reserve Ratio Change Down to ZERO PERCENT in 2020 Contributed to The Crisis Unfolding Today
The US economy has been struggling and teetering on many fronts - from delayed consequences of the Covid response such as the non-transitory inflation and supply chain disruptions, to the blowback of the American approach to the Ukraine/Russia war ([which my previous artices in March of 22’ warned of]
Then the Silicon Valley Bank(SVB) collapse happened, sending shockwaves of worry throughout the banking industry and finance sector as more bank failures followed...Credit Suisse(CS), whose solvency and balance sheet troubles have been causing discussion for months, was sold to UBS, who was forced by the Swiss government to buy the company in March at a *“price per share marked a 99% decline from Credit Suisse’s peak in 2007.” *
Silvergate and Signature Banks also failed, and rumors persist around Deutsche Bank and First Republic Bank. But there is little discussion about the root issue —Fractional Reserve Banking.. More specifically: undefined “Fractional” Reserve Banking.
You might be asking, “Why is that ‘fractional’ in quotes?”
Because….
The reserve ratio was lowered to an unprecedented figure of 0% (ZERO PERCENT in case the emphasis isn’t clear enough) in 2020..
If you don’t have to hold ANY reserves to back deposits, if you don’t even need a fraction of deposits to be backed…then it is a bit disingenuous to call it fractional reserve banking, is it not?
https://twitter.com/biancoresearch/status/1640058440964878338
- biancoresearch
While many such as the great Ron Paul have tirelessly pointed out that the fractional reserve banking has a ton of issues unto itself, it is worth noting that before 2020 there has always been minimum reserve deposits for banks. Big banks had to maintain 10% reserves as a standard, although many banks were only obligated to maintain as little as 3% reserves.Before the introduction of the Fed in the early 20th century, the National Bank Act of 1863 imposed 25% reserve requirements for U.S. banks under its charge.
While Keynesians and others defend fractional reserve banking, which is bad enough in this author’s opinion, the whole debate about the merit(or the evils) of fractional reserve banking becomes obsolete, maybe even a tragic joke absolutely fit for this clown-word, when we have completely abandoned any minimum reserve requirements to make place for an even more ludicrous, totally hollow, “fractional” reserve banking system.
Sorry, but Hive Watchers has blacklisted my account and I dont see the point of going through the motions of mirroring this long article in Markdown format - if you wish to continue reading, please read the rest on Substack and subscribe to me there
https://themcgwire.substack.com/p/the-biggest-banking-elefiat-in-the